European stocks rise as earnings lift sentiment ahead of Fed
By Sruthi Shankar and Shreyashi Sanyal
(Reuters) -European stocks gained on Wednesday as encouraging earnings reports from British bank Barclays and luxury group Kering helped investors look past worries about China's regulatory crackdown that kept markets on edge this week.
The pan-European STOXX 600 index rose 0.7% after two sessions of declines.
Barclays jumped 2.0% as it announced resumption of shareholder payouts after beating first-half profit expectations, while German lender Deutsche Bank edged up after it delivered a better-than-expected quarterly profit.
The tech sector was propped up by a 3.8% rise in Capgemini after the French consulting and IT services provider raised its 2021 outlook.
French luxury group Kering rose 3.6% as second-quarter sales nearly doubled, with its star fashion label Gucci accelerating sharply.
Analysts expect companies listed on the STOXX 600 to report profit growth of 120.8% in the second quarter versus 115.2% forecast last week, a Refinitiv IBES estimate found.
"The underlying foundations for the market remain as they were. We've got good companies producing better earnings," said David Miller, investment director at Quilter Cheviot Investment Management.
"Ratings are certainly higher than they were, but they're being backed up by earnings growth, and central banks continue to be supportive."
European stock markets outpaced Wall Street's benchmark S&P 500 index on Wednesday ahead of the U.S. Federal Reserve's policy decision later in the day, with investors waiting for any clues on the timing of tapering as policymakers face spiking inflation in the world's largest economy.
"It is unlikely to be a particularly exciting FOMC meeting, but there may be hints regarding the process of tapering of asset purchases," said Chris Beauchamp, chief market analyst at IG.
Wizz Air jumped 8.0% after the Hungarian airline forecast capacity to ramp up to between 90% and 100% of pre-pandemic levels in July and August.
Other airlines, including easyJet and British Airways-operator IAG, also gained on Britain's decision to exempt double-vaccinated visitors from the European Union and the United States from quarantine.
In deal-making, Adecco Group tumbled 7.9% as it said it agreed to buy AKKA Technologies in a deal worth 2 billion euros ($2.4 billion), the biggest deal in the Swiss staffing company's 25-year history.
Telecom Italia edged 0.3% higher on saying it may seek investors for its cloud and wholesale undersea cable businesses as it looks to extract value from its assets.
(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Sriraj Kalluvila and Barbara Lewis)
